Prime Brokerage

Prime Brokerage

Overview

This eCourse consists of three modules. Module 1 explains prime brokerage and the benefits it provides to different institutions. This module also discusses the prime brokerage trade process, the participants in the process, and the roles of these participants.

Module 2 provides an overview of the relationship between an institution and the prime broker. The selection of a prime broker by an institution is a critical and multifaceted decision. It is critical because institutions have different goals, finances, and structures, and they require different levels and types of service. This module explains the importance placed on the timeliness and accuracy of trade execution and data recording, and elaborates on the various other needs of institutions (or their clients). Finally, it explains some of the ancillary services provided by a prime broker to its institutional clients.

As explained in Module 1, there are several reasons why a bank or broker/dealer might want to become a ‘prime broker’. Among the reasons given were revenue enhancement and inventory supplementation. Module 3 explores the prime broker as it functions in a wider arena, and looks at the ancillary benefits derived from a prime brokerage operation.

Objective

On completion of this tutorial, you will be able to:
- Describe prime brokerage and list its benefits to the institutional customer
- Understand the relationship between prime brokers and executing banks or broker/dealers
- Explain the role that an executing bank or broker/dealer fills in the prime brokerage process
- Identify the key elements of the relationship sought by an institution with its prime broker
- Describe the importance placed on timeliness and accuracy in relation to trade execution and data recording
- Outline the needs of the clients of an institution
- Explain some of the ancillary services provided by prime brokers to an institution
- Describe the way in which a bank or broker/dealer builds the different elements of a prime brokerage business
- Explain the ancillary opportunities afforded to a prime brokerage firm, including those opportunities not directly related to the prime brokerage business